The Rise of Depositron: How I Am Using AI to Fix a Half-Billion Dollar Problem
Where I share the launch of a tool that puts legal power back in tenants’ hands and flips the script of an engrained power dynamic
Welcome back, my fellow legal rebels! 👋
While others celebrated American independence with fireworks, beer, and barbecue, I celebrated the 4th of July in my own way, by engaging in a little healthy anarchy and launching a new tool for renters to liberate their security deposits from greedy landlords.
We all know that gut-wrenching anxiety of entrusting someone else with our money. Whether it’s a bank, a friend, a landlord, or even a spouse, we’re forced to trust they’ll do the right thing. But what happens when the cards are stacked against you? When the person you’ve trusted decides to take advantage? And worse yet, when you feel completely powerless to fight back?
This powerlessness isn’t accidental, it’s by design. When nearly 5,000 NYC tenants file complaints about withheld deposits in just two years, we’re not witnessing isolated incidents of bad landlords. We’re seeing systematic theft enabled by legal complexity, where the very system meant to protect tenants has been weaponized against them.
That’s a fight worth picking. And it’s exactly why I collaborated with Sateesh Nori to build Depositron.
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“My landlord is keeping my entire $3,200 deposit and won’t return my calls,” Angela wrote. “Is it worth fighting?”
I know the math she’s doing in her head. Hire a lawyer? That’s $300+ per hour. Small claims court? That’s 14+ months in Queens, multiple court appearances, and no guarantee of collection even if she wins. Walk away? That’s $3,200 she desperately needs for her next apartment’s upfront costs, which now average nearly $13,000 in NYC.
This impossible calculation plays out thousands of times every day across New York City. It’s a calculation that landlords count on, and it’s exactly a problem that technology can help set straight.
The Hidden Scale of Security Deposit Theft
When we started researching security deposit violations for Depositron, the numbers were staggering. Since 2023 alone, nearly 5,000 NYC tenants have filed complaints with the New York Attorney General about illegally withheld security deposits. The AG’s office has recovered $2.1 million for tenants through mediation, but that represents only the fraction of tenants who knew they could file complaints and had the persistence to navigate the bureaucracy.
The reality is far worse. The NYC Comptroller estimates approximately Half a Billion dollars is tied up in security deposits citywide at any given time. With average deposits now exceeding $3,600 for a typical NYC apartment, and systematic violations affecting an estimated 30-40% of move-outs, we’re looking at hundreds of millions in stolen tenant funds annually.
This isn’t hyperbole. Under New York State law, landlords must return security deposits within 14 days of tenant move-out, with itemized statements for any deductions. Landlords can only deduct for unpaid rent, actual damages beyond normal wear and tear, and specified charges like unpaid utilities. Charges for repainting, small nail holes, or “general cleaning” are explicitly illegal.
Yet landlords routinely violate these requirements because they’ve calculated, amorally but correctly, that most tenants won’t fight back. The legal system has created a perverse incentive structure where breaking the law is profitable.
When Justice Takes 14 Months (If You’re Lucky)
The enforcement gap is where this story gets truly infuriating. New York’s 2019 Housing Stability and Tenant Protection Act didn’t just cap deposits at one month’s rent, it introduced automatic forfeiture provisions. If a landlord misses the 14-day deadline without a valid reason, they legally forfeit their right to keep any portion of the deposit. Period.
But here’s the catch: tenants have to know this law exists and be willing to enforce it.
The primary enforcement mechanism is small claims court, where tenants can sue for up to twice the original deposit amount for willful violations. Sounds promising, right? In reality, court backlogs have turned this into a cruel joke. Queens averages 14+ months for resolution. Brooklyn takes 8.5 months. Even in Manhattan, tenants wait 7 months on average.
Meanwhile, tenants who’ve moved out of the city, a common scenario in NYC’s transient rental market, face geographic barriers that make multiple court appearances nearly impossible. Many simply give up, which is exactly what landlords count on.
The New York Attorney General’s mediation service offers a more effective alternative, often resolving disputes within days of intervention. But it’s overwhelmed, under-publicized, and reactive rather than preventive. Tenants need to know it exists, be willing to navigate government bureaucracy, and hope their case gets prioritized among thousands of complaints.
The Technology of Equalizing Justice
This is where technology can be transformative, not by replacing human judgment, but by democratizing access to tools that have traditionally required expensive legal expertise.
Demand letters work because they signal to landlords that tenants understand their rights and are prepared to enforce them. When a landlord receives a letter citing General Obligations Law Section 7-103 and referencing automatic forfeiture provisions, they’re no longer dealing with a tenant who doesn’t know their rights and who they can ignore, they’re facing potential legal consequences.
The challenge has always been that creating these letters required legal research, proper formatting, and knowledge of procedural requirements that most tenants don’t possess. That’s exactly what Depositron automates.
Our platform takes basic information from tenants, their name, address, deposit amount, move-out date, and photos of the apartment condition, and generates professionally formatted demand letters that cite the specific laws landlords violated. The letters reference automatic forfeiture provisions, outline consequences for continued non-compliance, and preserve tenants’ rights to pursue double damages in court. This changes landlords’ cost-benefit calculation.
Beyond Individual Cases: Systemic Impact
But Depositron isn’t just about helping individual tenants recover their deposits. Every demand letter sent will shift the broader dynamic between landlords and tenants.
Right now, landlords operate with impunity because they know the vast majority of tenants will walk away rather than fight. When tenants start consistently asserting their rights with professional legal tools, landlords will adjust their behavior. Why risk automatic forfeiture and double damages when complying with the 14-day return law is simpler?
This is how technology can create systemic change without requiring new legislation or enforcement mechanisms. By making existing legal protections accessible and actionable, we can transform a culture of routine violation into one of routine compliance.
Sateesh and I are also committed to transparency around impact. Depositron will aggregate anonymized data on success rates, common violation patterns, and geographic trends that we share with housing advocates and policymakers. This intelligence helps target interventions more effectively and measure progress in real time.
For instance, if our data shows certain neighborhoods have systematically higher violation rates, that information can inform targeted enforcement by the Attorney General’s office. If specific landlords or management companies appear repeatedly in our database, that establishes patterns that support larger investigative actions.
The Broader Access to Justice Crisis
For most lawyers, security deposits are small potatoes and not worth their time. For renters, security deposits signify freedom (in dollars and cents): to move on, to find a new home, to have some peace of mind. But, security deposits represent just one example of a much larger problem: the systematic exclusion of ordinary people from legal protections that exist on paper but remain inaccessible in practice.
Think about employment disputes, consumer protection violations, immigration issues, or family law challenges. In each area, people face the same impossible calculation my friend did with her security deposit: the cost and complexity of enforcing your rights often exceeds the value of the protection itself.
This isn’t an accident, it’s a feature of how our legal system has evolved. Legal complexity creates artificial scarcity around basic protections, ensuring that justice remains primarily available to those who can afford traditional hourly legal representation.
Technology can flip this dynamic, but only if we’re thoughtful about how we deploy it. The goal isn’t to replace lawyers, especially for things lawyers would rather not do because it’s unprofitable. It’s to make basic legal tools accessible to everyone, not just those who can afford $300+ per hour consultations.
What Justice Looks Like in the Digital Age
The future I envision isn’t one where technology replaces human judgment. It’s one where routine legal protections (the kind that should be available to everyone) are actually accessible to everyone.
Imagine a world where employment violations trigger automatic demand letters citing relevant labor laws. Where consumer protection disputes get resolved through professional legal pressure rather than abandoned in frustration. Where immigration deadlines are tracked automatically and compliance requirements explained in plain language.
This isn’t science fiction: it’s an engineering problem. The legal framework already exists. The challenge is making it accessible and actionable for ordinary people facing legal challenges. And, I am here for it!
Closing Thoughts
Building Depositron with Sateesh has reinforced my conviction that technology should serve justice, not just profit. When we can use automation to transform a 14-month court battle into a two-week resolution, we’re not just saving time, we’re returning power to the people who deserve it.
Justice delayed is justice denied. Technology deployed thoughtfully can ensure that justice is neither delayed nor denied to those who need it most.
The security deposit theft crisis is solvable. We have the legal framework, the technological capability, and now the platform to make it happen. The only question is whether we’ll choose to use these tools to create a more just system, or continue accepting that legal protections exist only for those privileged enough to access them.
I know which future I’m building toward. The question is: will you join us?
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Cheers,
Tom Martin
CEO and Founder, LawDroid
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